In 2009, Oakland, Calif.-based research firm Bersin & Associates released a report that revealed an 11% decrease in average training expenditures per employee from 2007 to 2008. According to the report “2009 Corporate Learning Factbook,” $1,202 was spent per learner in 2007 compared to $1,075 per learner in 2008. Overall, according to the report, the U.S. corporate training market shrank from $58.5 billion in 2007 to $56.2 billion in 2008, which marked the greatest decline in more than 10 years.
According to Josh Bersin, president of the firm, organizations funnel money and staff into traditional and “nonstrategic” training programs in boom years. However, during times of economic downturn, such as during the recession in 2008, organizations seek out less expensive, nontraditional training programs and methods, which include a combination of formal and informal learning with an emphasis on collaboration, knowledge sharing, social networking, coaching, and mentoring.
“The environment is very challenging,” says Greg Clayton, VP of the Technology Professional Business Unit, a division of Delmar Cengage Learning, Florence, Ky., that concentrates on developing training, reference, and test preparation materials for practicing, skills-based professionals in trucking, automotive, building trades, and electrical. “The impact of this recession on the construction industry, including the electrical industry, which probably requires the highest degree of training of all the trades, has been incredible.”
Clayton’s division focuses on skills-based curriculum for professionals, including electricians and electrical contractors, mostly at the institutional level, including union and independent training programs, technical colleges, and large electrical contracting firms. “Most of the time, the programs are customized to meet a certain need that the institution has versus off-the-shelf,” says Clayton. “A lot of what we provide is more of a blended approach where there is an instructor, but there’s typically an online component to it, too. It can also be an entire program setup self-paced with some instructor help.”
From 2008 through 2010 — during and following the recession — the Delmar division experienced less demand for its materials and instruction as enrollment in apprenticeship programs began to decline. Clayton estimates that in some cases it went down by as much as half. In addition, Delmar’s other clients, the electrical contractors, were also cutting their training budgets. “The contractors were responding first for survival,” he says.
According to Bill Pelster, leader of the human capital training and development practice at Deloitte, a Kansas City, Mo.-based consulting, financial advisory, risk management firm, it usually takes two years from the time a recession hits for training budgets to return to previous levels. “Training budgets are a lagging indicator,” he says. “They come back in increments, not in one fell swoop.”
So although business may have recently picked up a bit for providers of electrical training programs, the recession has already forced them to transform the way they provide and measure their results.
In manufacturing facilities maintenance, there was a training deficit for facilities engineers before the recession hit, according to Don Fitchett, head of the St. Louis-based industrial training firm Business Industrial Network (BIN). Still, the recession did his firm no favors. In the last year, it performed two on-site training seminars, whereas before the economic downturn, it was presenting two a month. “For awhile, we didn’t know if we were going to make it,” he says. “It’s been tough.”
For the biggest part of manufacturing history, training was wrongly viewed as an overhead cost, says Fitchett, who estimates that 95% of facilities had one person qualified to tell them what was wrong with their equipment, even though the facility was typically operating three shifts of workers. “So if that person was out, he had to be called back in again,” he says.
But right before the recession, the industry was beginning to recognize the great cost savings realized by increased training. “Finally, they were putting on one qualified person per shift,” he concludes. “When they base their decisions on true costs, they make them differently.”
However, spurred by the recession, employee training on industrial systems, such as SCADA, PLCs, and HMI's, is once again a low priority, making it one of the first budgets to get cut. For example, results of a survey of 50 manufacturing companies that requested training quotes from BIN but did not acquire any training for their employees from 2008 to 2010 reveal that 40% cut training budgets due to the economic decline. This, says Fitchett, puts the U.S. manufacturing industry at the risk of the paradox: no training because budgets are cut — and no budget increases for training in order to pay for increased downtime costs caused by lack of training.
Yet, ironically, says Fitchett, training is desperately needed by the workforce entering the market because of the mass retirement of the baby boomers, some of whom are taking early retirement offered to them because of the recession. Fitchett describes this combination of the loss of legacy knowledge through retirement and the lack of resources for training new employees as a “double whammy.” Maintenance managers who have already been having a hard time finding experienced industrial electricians who know PLCs will find it even more difficult once the market picks up.
Fitchett, who offers on-site training sessions, in-classroom seminars, and self-guided programs, claims that real-world, hands-on knowledge transfer, customized to the facility’s equipment by an instructor to a small group of trainees on-site, results in the greatest return on investment. “Hands-on, real-world
training has a greater knowledge transfer per hour of training than textbook learning,” he says. “That teaches them what they need to know.”
The second best option, according to Fitchett, is real-world knowledge transfer by an instructor to a student at a public workshop/seminar limited to five to 10 attendees per instructor.
Fairly new to the trade professions, the mix between on-site training and seminars can be done effectively with live webcasts by seasoned instructors with constant question and answer sessions, real-world applications, and simulation software. But not all software is created equal, warns Fitchett. “Be careful when shopping for training software, as many claim to be “interactive,” where the interactivity is only asking you questions,” says Fitchett, who asserts real-world training simulation software delivers more training per dollar than presentation-only software.
BIN has been encouraging out-of-work residential electrical contractors to consider training in industrial equipment (Recession Training for Individuals on page 23). “Electricity is electricity, but they won’t know the PLC part,” says Fitchett. “It takes a lot of training, but if they can get in the door, they can learn PLCs. For some, there could be a lot of additional training required to crossover, but on the bright side, the industry is starving for PLC technicians and maintenance electricians.”
In addition, the firm has seen some cross-training for members of IT departments because of the computer functionality of PLCs. “OEMs are starting to use a higher level programming language — C++ — and electricians don’t know that,” says Fitchett. “We’re getting IT people in because of the PACs, which are basically a computer blended with a PLC. A lot of corporate policies say that if it has an Ethernet port on it, it comes under the IT department’s control. So now all of a sudden they’ve got this asset that’s under their management so they need training for that.”
To widen its pool of students, Gale, a different division of Cengage Learning and a publisher of research and reference resources for libraries, schools, and businesses, offers Career Transitions, an online career service tool, to public and university libraries. “This is one of the responses we had to the recession,” says Clayton. “The product was designed for patrons of libraries to do some career exploration, particularly if they are out of work.”
Employment-related activities are the No. 1 use of public libraries today, and similar demands are extended to colleges and schools. Career Transitions provides hands-on guidance and immediate access to key job search activities. The program targets displaced workers affected by economic recession and job outsourcing; workers in need of job training and retraining; white-collar workers displaced by tough economic conditions; manual and migrant laborers who have lost their jobs; students struggling to break into the job market, transitioning into family-sustaining wage employment or exploring nontraditional opportunities; and seniors returning to the job market to supplement dwindling retirement income.
The program tries to help these users research trade professions, matching professional experience to new careers; prepare for interviews and certification; and even assist with resumés. “It can help people move from one skill to another,” says Clayton.
Return on investment
During an economic crisis, companies should focus on measurable returns on their investments in training. A survey of 84 corporate and government training professionals conducted in 2009 by training services firm Expertus, Santa Clara, Calif., and research provider Training Industry, Cary, N.C., revealed that return-on-investment and business-impact metrics are not often used to evaluate training programs. “We recommend that organizations make measuring the value and impact of learning a priority,” said Doug Harward, chief executive of Training Industry, in a statement accompanying the survey results. “This way, training organizations can make better-informed budgetary decisions about which training should be supported and which training needs to be improved.”
Due to its clients’ leaner training budgets, Delmar’s Technology Professional Business Unit puts more emphasis on measuring the results of its instruction. “A lot of larger companies and businesses see value in training and believe businesses that invest in training are less likely to fail,” says Clayton. “But given the economic environment that we’re in, they want to make sure there is a specific return on investment on money put into training. They want to see results they can measure.”
Furthermore, measuring methods have also been used to transform the Delmar division’s in-class training. For example, for a customized apprenticeship training program for a large institution, it designed an online assessment system, which was used up front and at the back end of the training. “Sometimes, clients have an unrealistic expectation that from the beginning of training these workers can hit the ground running,” says Clayton. “But it was important for the electrical contractor funding this training to be able to get some value out of the worker on the job.”
Therefore, before the students even attended class, they were required to participate in an online knowledge assessment. The instructor was then able to tailor the classroom portion of the program to material the students didn’t know, cutting down on time spent going over theory and increasing time in the lab to learn hands-on skills and safety best practices. “The problem was too much time in the classroom and not enough time in the lab,” says Clayton. “So we asked: How could we bridge that gap? We thought that if these instructors had information before they get to class, they could focus on the gaps instead of trying to cover the whole gamut — and it’s actually worked to bridge that gap.”
Play to your Strengths
Instruction targeted to the needs of the company is less expensive and more effective, according to Armando Justo, a Washington, D.C.-based organizational development practitioner in his article “Developing Competencies During The Economic Downturn.” Although organizations can benefit from a positive short-term effect from cutting training budgets, in the long term, these cutbacks could actually harm them. In recent years, employee-provided career development has become increasingly important to workers. Furthermore, the lack of training could actually generate structural deficiencies in your organization, according to Justo, who cites a 2008 report from the Corporate Executive Board, Arlington, Va., that says best organizations do not cut their general and administrative expense (G&A) budgets. Instead, they improve cost discipline of their operational areas, protect learning investments, and make critical talent plays to emerge successful from difficult periods, writes Justo.
According to Justo, the main strategy during these difficult times is to implement “competency-based learning” to develop critical skills (see SIDEBAR: Developing Competencies below). Justo argues competency-based learning methods are cost-effective and focused “to deliver the best knowledge to the right person at the right time.” Justo writes, “By including periods of instruction and periods of practical application, followed by individual and group reflection, individuals assimilate and internalize new learning and enhance their performance.”
The competency approach differs from more traditional methods of training in that it focuses on the importance of measuring outcomes rather than measuring the learning process. This approach allows more flexibility and can be applied to functions of a similar nature. “Simply described, competencies are the combination of knowledge, skills, and abilities that when effectively applied, produce a successful performance in a defined function or activity,” writes Justo. “Competencies are observable, measurable, and can be developed to reinforce competitive advantages and future performance.”
In addition, to be effective, the competency-based approach should be aligned with business needs, requiring the participation business units and guiding the identification and profiling process. “Generic and off-the-shelf competency solutions do not provide the promised benefits, because they are not linked with the organization’s key business processes, and may become an additional administrative burden,” writes Justo.
Training in strong markets may also improve bottom lines. Delmar has invested in training and reference products for green construction. “That’s been an area of growth for us,” says Clayton. “When contractors have an opportunity to bid on projects with an alternative energy element, they’ll start requesting training in that area. We also see the technical colleges and the apprenticeship programs adjusting their curriculum to match it.”
In addition, in different regions, core curriculum is being transformed to match the markets. “We’ve seen some really aggressive changes in the way that curriculum is being designed,” says Clayton. “You offer core training in the fundamentals, like electrical theory, basic wiring, and things of that nature, but then you move into a non-core area specialization, such as low voltage, for example. You get more in-depth training on that than you would just scratching the surface in a more general program, but you let the locals decide what specialization occurs so that it can be more regional.”
SIDEBAR: Developing Competencies
When competencies are properly aligned with the mission, vision, and key business processes of an organization, they become a powerful tool for enhancing its competitiveness. In the article, “Developing Competencies During The Economic Downturn,” Armando Justo, Washington, D.C.-based organizational development practitioner, suggests the following five actions:
- Map key business processes, and identify critical indicators: Analyze your mission and vision, and identify competencies required to perform key functions. Your competency model should be directly aligned with your key business processes and priorities.
- Profile functional and behavioral competencies for those key functions and critical indicators: Profiling competencies and associated performance criteria/behaviors is a critical task. The author suggests combining the functionalist and behavioral approaches. The functional analysis technique is used to identify functional competencies. These competencies describe what is required to successfully perform in a particular function.
Behavioral competencies help to improve interpersonal relationships and individual effectiveness. Behavioral competencies complement functional competencies but do not substitute them.
- Involve key staff in the identification and profiling of competencies: These employees have been there for a long time, and they know how to do the work. Furthermore, they will be natural change agents that will help to reinforce the implementation of competencies.
- Use competencies in your learning plans: Expand the traditional cognitive training events and develop meaningful learning interventions that take into account key learning principles from the behaviorist, cognitive, and constructivist learning theories. Use a variety of learning resources to maximize learning retention and application. Integrate periods of instruction with periods of application, ensuring individual and group internalization. Use competency-based case studies, on-the-job training, coaching, and mentoring. Take advantage of experienced staff, and assign them with key mentoring roles.
- Develop a competency inventory of your staff, and take advantage of your most competent staff: Give your most competent employees challenging work, and assign them responsibilities for developing others. Provide them with special rewards and incentives.
SIDEBAR: Recession Training
Don Fitchett, head of the St. Louis-based industrial training firm Business Industrial Network (BIN), offers advice on how individuals seeking training in the industrial sector can get the greatest return on their training investment. Hands-on, real-world training has a greater knowledge transfer per hour of training than text book learning, he advises. In addition, real-world training simulation software delivers more training per dollar than presentation-only software. “Smart businesspeople know during a recession one needs to invest more in advertising, not less,” says Fitchett. “The same strategy should apply toward the U.S. manufacturing industry’s recession training budget.”
To get the most out of your training, says Fitchett, think outside of the box. Following are some tips to do just that:
- Before enrolling in a seminar, check the certificate. Make sure it’s professional certificate with the CEUs indicated on it. A black-and-white photocopied certificate won’t be much help with future employment opportunities.
- Check the training material for the seminars. Do they offer a manual? Does the manual have instructor notes and/or additional information? To get the most for your money, you want extra learning material so you can continue your studies on your own after you leave the seminar.
- If you are currently unemployed — or your current employer is on its way out of business — you might be strapped for money to pay for training. Ask the company delivering the training if it has a payment plan, which will allow you to spread the training cost over several months.
- Check with your local employment office to see if there are any government grants or other funding available for the type of training you seek.
- If travel time or expenses are out of the question, look for online training that meets your needs. With online training, you don’t need time off from work, or you can continue to search for work while you train.
- Consider less expensive training solutions, such as training simulation software.